Bayit Yehudi chairman and Economy Minister Naftali Bennett dismissed on Tuesday the possibility of swapping land with the Palestinians for peace or security. The ongoing Israeli-Palestinian peace negotiations "have only brought us terror," Bennett said at an Institute for National Security Studies (INSS) conference. He further warned that the establishment of an independent Palestinian state under any future peace deal will lead to terror. The Palestinian children who were born at the time the 1993 Oslo accord was agreed upon are now 21 and have grown up on incitement, he said. "No piece of paper will change this." Bennett turned...

European governments must rapidly commit to fiscal union or a partial break-up of the euro to prevent a "fundamental erosion" in demand for the region's debt, Pimco, the world's biggest bond investor, has warned. "They can't continue to muddle through," said Andrew Balls, who runs Pimco's European investments. "They'll either have to signal their position or you'll get a continued disengagement by investors from the eurozone." The stark assessment comes ahead of a gathering of European leaders in Brussels that has been billed as a summit that cannot afford to fail. A crisis that began in Greece almost two years...

Jim Sinclair’s Commentary on the article that follows. If called on to perform they will fail. It is that simple. It is the essence of the OTC derivative. They work if no one calls on them to work. It has always been so. [End Comment] [Article Begins] The European sovereign debt crisis stands as the latest in a long line of similar crises. Argentina in 2001. Russia in 1998. Mexico in 1994. The list goes back into history. Debt crises are about as natural as earthquakes, but this time there is something different — and possibly more dangerous. The European...

"The Federal Reserve, amid persistent worries about Europe's sovereign debt crisis, last week quietly approved the extension of a crisis-lending program that allows the European Central Bank to tap the U.S. for dollars, Federal Reserve Bank of St. Louis President James Bullard said. The Fed's dollar-lending agreements with the ECB—as well as the central banks of England, Canada, Japan and Switzerland—were scheduled to expire Aug. 1. The Fed and other central banks haven't yet disclosed renewal of the agreements, known as swap lines..."

A day after the Senate passed its version of a sweeping financial overhaul bill, the banking industry fired a warning shot at Washington -- and anyone looking to buy a house -- that rules restricting banks' use of derivatives may crimp an already vulnerable housing recovery. Strongly hinting that average Joes could become collateral damage as a result of Congress' hard-line approach to regulating banks, Wall Street warned that the cost of home ownership could surge as a result of rules that prevent banks from using a form of derivatives called swaps, which help banks hedge against interest-rate risk and...

WASHINGTON (MarketWatch) -- The Federal Open Market Commitee authorized Monday the reopening of a dollar swap facility with the Bank of Japan, the Fed announced Monday. The program is similar to the arrangements established yesterday by the Fed and a group of five central banks including the European Central Bank to make sure that European banks have access to dollars if needed. The swap lines were authorized by the Federal Open Market Committee through Jan. 2011.

...While the Federal Reserve may say these swap lines are necessary "to help improve liquidity conditions in U.S. dollar funding markets and to prevent the spread of strains to other markets and financial centers", NIA recognizes that this is nothing more than another transfer of wealth from the American middle class to bankers around the world through inflation. This program was originally enacted in 2008 when the Federal Reserve loaned $582.8 billion to foreign central banks without any disclosure of which central banks got the money. NIA believes it is unconstitutional for the Federal Reserve to make loans to foreign...

That's a video that everyone that cares about the future of this nation should watch carefully. It's Democratic Rep Alan Grayson from Florida grilling Fed Chairman Bernanke about something called "liquidity swaps". Ask one thousand people what a liqudity swap is and I doubt more than one will have heard of it. All one thousand will have no experience trading them. That's because a "liquidity swap" is something only central bankers trade. That should scare everyone.

So is that it? Is the downturn over? After bouncing off of 6500, or more than half its peak value, and with Citigroup briefly breaking $1, the Dow Jones Industrial Average has rallied back more than 1200 points. So, is it safe to go back in the water? Best to figure out what went wrong first -- what I like to call a bear-raid extraordinaire.The Dow clearly got a boost from Treasury Secretary Tim Geithner's new and improved plan, announced on Monday, to rid our banks of those nasty toxic assets. The idea is to form a "Public-Private Investment Fund"...

Credit-default-swap traders may need a shorter leash. LIQUIDATION. A GOOD SOAKING. PLENTY OF TEARS. It is real wet out there in the markets. Given all the known big-picture reasons for this drenching, does it makes sense to continue enabling the folks who make and sell umbrellas to force it to rain at will? The people with a stake in umbrella prices who are able to trigger a downpour are the traders who bid up credit-default swaps on individual companies, whether they own their debt or not, and short the stock. In combination, these actions feed signals into the market that...

<p>The U.S. government rescued giant insurer American International Group in part because its collapse would dramatically hurt European banks, a senior Democratic lawmaker said on Thursday.</p>
<p>The U.S. government has bailed out AIG three times since Sept. 16 and committed about $180 billion to keep the insurer alive and doing business.</p>

Any honest assessment must include the role that credit-default swaps have played in this mess: it’s the elephant in the room, the $30 trillion market that people do not want to talk about. C.D.S.’s have already figured prominently in taxpayer bailouts. The $150 billion rescue of the American International Group, for example, came about because of swaps the insurer had written on mortgage securities. And the $100 billion taxpayer backstop handed to Bank of America on Jan. 16 had a good bit to do with soured credit-default swaps that the bank inherited when it acquired Merrill Lynch. “Credit-default swaps written...

Federal Reserve Board data show that: _ More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions. _ Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year. _ Only one of the top 25 subprime lenders in 2006 was directly subject to the housing law that's being lambasted by conservative critics.

Abstract: Five of the world's richest hedge fund managers, including George Soros, the man who the broke the Bank of England, have been called to account by US politicians for their role in the collapse of the global financial system. The quintet – including John Paulson, who made $3.7bn (£2.49bn) last year betting against the US mortgage market – were grilled over their roles in buying unregulated derivatives products, which some politicians believe contributed to the financial markets' meltdown. The men, who each earned more than $1bn each last year, were called to account by Democratic Congressman Henry Waxman, who...

Reforms are defusing the danger in the credit-default swap market. AS THE GLOBAL CREDIT CRISIS GRINDS ON WITHOUT seeming relief, worries grow that a mishap in the once obscure credit-default swap market could trigger an even more lethal financial meltdown. ..... It's easy to understand why credit-default swaps, which have been called financial weapons of mass destruction, can engender hysteria. These quasi-insurance policies allow buyers to insure all manner of debt instruments, including corporate and sovereign-nation bonds, various bond indexes and securitizations, against any credit losses from defaults. Demand for them grew explosively during the past decade's credit boom. According...

Two days after Lehman Brothers Holdings Inc. sought bankruptcy protection, an explosive rumor spread that another big Wall Street firm, Morgan Stanley, was on the brink of failure. The chatter on trading desks that Sept. 17 was that Deutsche Bank AG had yanked a $25 billion credit line to the firm That wasn't true, but it helped trigger a cascade of bearish bets against Morgan Stanley. Chief Executive Officer John Mack complained bitterly that profit-hungry traders were sowing panic. Yet he lacked a critical piece of information: Who exactly was behind those damaging trades? Trading records reviewed by The Wall...

In the case of A.I.G., the virus exploded from a freewheeling little 377-person unit in London, and flourished in a climate of opulent pay, lax oversight and blind faith in financial risk models. It nearly decimated one of the world’s most admired companies, a seemingly sturdy insurer with a trillion-dollar balance sheet, 116,000 employees and operations in 130 countries. The insurance giant’s London unit was known as A.I.G. Financial Products, or A.I.G.F.P. It was run with almost complete autonomy, and with an iron hand, by Joseph J. Cassano, according to current and former A.I.G. employees.

NEW YORK (Reuters) – SEC Chairman Christopher Cox has called on Congress to pass legislation that would make so-called credit default swaps more transparent, including requiring that dealers in over-the-counter swaps publicly report their trades and the trades' value. Writing in Sunday's New York Times, Cox noted that the $55 trillion credit defaults market is more than the GNP of all the world's nations combined, and that credit default swaps "play an important role in the smooth functioning of capital markets." But, he said, "our markets function best when they are highly transparent," while credit default swaps have "operated in...

The financial crisis has put a spotlight on the obscure world of credit default swaps - which trade in a vast, unregulated market that most people haven't heard of and even fewer understand. Will this be the next disaster? If Hieronymus Bosch were alive today to paint a triptych called "The Garden of Mortgage Delights," we'd recognize most of the characters in the bacchanalia and its hellish aftermath. Looming largest, of course, would be the Luciferian figures of Greed and Excessive Debt. Scurrying throughout would be the Wall Street bankers who turned these burgeoning debts into exotic securities with tangled...

. What is counterparty risk, and why is it suddenly an issue? In the simplest terms, counterparty risk is the chance that the person on the other side of a deal - the counterparty - won't be there when it's time to pay up. Take an example most people can relate to: Selling a home. There's always the chance that when it comes time to close the deal a month or so down the road, the buyer won't show up or won't have the money. In financial markets, traders and banks are constantly thinking about counterparty risk. When they make...

BASRA AIR STATION — A Royal Air Force officer at Basra Air Station in southern Iraq is used to anchoring oil rigs to the ocean floor, but he’s spent the last two months patching up soldiers and airmen at this large British base near the Persian Gulf. Flight. Lt. Paul Andrews switched from a role as troubleshooter on oil rigs to being a military doctor, applying his trade on the front-lines. He just finished a two-month assignment at a medical center at Basra Air Station, gaining promotion to squadron leader at the same time. Andrews, who joined the RAF in...

<p>Dearborn, Michigan, May 24 (Bloomberg) -- CMS Energy Corp., Michigan's largest utility owner, said Chief Executive Officer William T. McCormick Jr. resigned after the company disclosed $5.2 billion of revenue from sham electricity trades.</p>
<p>CMS financial statements will be revised for 2000 and 2001 to remove revenue from ``round-trip'' trades that are being investigated by regulators, company executives said. Board member Kenneth Whipple, a 67-year-old former Ford Motor Co. executive, will replace McCormick, 57, until a permanent successor is hired.</p>

<p>Sacramento, California, May 23 (Bloomberg) -- California Governor Gray Davis renewed his demand that federal energy regulators order power companies to refund $8.9 billion to the state, citing recent disclosures of market manipulation.</p>
<p>Davis told Federal Energy Regulator Commission Chairman Pat Wood in a letter that Enron Corp. memos prove the market was manipulated in 2000 and 2001 at the expense of consumers. Enron admitted creating fake congestion on transmission lines and other trading methods during a period when prices skyrocketed.</p>

(Adds Entergy-Koch denial) By Chris Baltimore WASHINGTON, May 22 (Reuters) - Federal energy regulators on Wednesday widened a probe of California's power crisis to include sham natural gas trades, as six large energy firms announced they did not use Enron Corp's now-infamous schemes to boost profits. The U.S. Federal Energy Regulatory Commission (FERC) is now examining bankrupt Enron's role in the soaring electricity prices that led to California blackouts, as well as a variety of questionable trading schemes for power and natural gas that may have been used by more than a 100 other firms. In a separate development,...